- The Washington Times - Saturday, October 27, 2001

The Bush administration yesterday embraced a Senate Republican stimulus plan based on quickly accelerating the income-tax cuts that were enacted earlier this year to get the ailing U.S. economy growing again.

Administration officials said the White House was fully behind a new plan that Senate Republican leaders and Treasury Secretary Paul H. O'Neill had worked out at a meeting Thursday in the Capitol. The compromise is closer in size to the $75 billion the president had proposed.

At the same time, key centrist Democrats, led by Louisiana Sen. John B. Breaux, were working behind the scenes to fashion a bipartisan compromise to overcome Senate Majority Leader Tom Daschle's opposition to any major tax-cut plan.

With evidence mounting almost daily that the economy is becoming increasingly weaker, President Bush also stepped up his political offensive for a quick stimulus bill yesterday, repeatedly telling a group of business and agricultural leaders in the White House East Room of the need to "get it out of the Senate."

Tying his tax-cut proposals ever more closely to the economic demands of the war against terrorism, Mr. Bush told the leaders, "In all our wars, the productive power of the economy has been one of our nation's great advantages. And that's true today. But it's clear that our economy has been shocked. There have been shock waves sent throughout all parts of the nation's economic fabric.

"It's in the national interest to get a [tax-cut stimulus] bill to my desk, and I urge the Senate to do so," he said.

The administration-backed plan would let the income-tax cuts that were due to take effect in 2004 and 2006 become effective next year, a much more accelerated tax-cut plan than the $100 billion tax-cut bill passed by the House on Wednesday.

Drafted by Sen. Charles E. Grassley of Iowa, the ranking Republican on the tax-writing Finance Committee, the plan would also repeal the corporate alternative minimum tax, give businesses faster tax write-offs for new equipment, and provide tax rebates to low- and middle-income people who received no rebates earlier this year because they paid no income taxes.

The House bill would have provide substantial tax credits to businesses and changes in the capital-gains-tax rules, but the Senate Republican plan would drop those provisions.

Administration officials yesterday talked up the Senate Republican stimulus plan.

"We're thrilled that the Senate Republicans are putting together a bill that contains what the president has proposed to reward work and investment," said Michele Davis, Mr. O'Neill's chief spokeswoman.

"Anybody watching what has been happening to the economy understands that we have to have a strong economy to win this war. We're not going to let terrorists cripple this economy," she said.

The coordinated move by the administration and Senate Republicans comes at a time when Finance Committee Chairman Max Baucus, Montana Democrat, was struggling to get a Democratic majority on his committee to move the Democratic stimulus bill to the Senate floor.

Mr. Baucus has an 11-10 Democratic majority on that committee, but several members of the panel, including Mr. Breaux, do not like the bill because they think it contains too much spending and very little in tax cuts to stimulate economic growth and create jobs.

"Breaux thinks the economy needs marginal tax-rate cuts to stimulate more investment," a Democratic staffer said.

Mr. Breaux, a leader in the Senate's bipartisan Centrist Coalition, was the key player earlier this year who helped Mr. Bush get his tax-cut plan through Congress with the support of 11 other Senate Democrats.

But Mr. Daschle, South Dakota Democrat, is unalterably opposed to further tax cuts and is sending signals that a stimulus bill would not be one of his priorities right now, pointing to the unfinished appropriations bills that need to get passed before Congress adjourns later this month.

That resistance may change, however, as unemployment continues to rise and if the economy sinks into a recession, increasing the political pressure on the Senate to act on the president's plan.

While the Senate plan, like the House bill, has its critics, the response was generally favorable among conservatives.

"It's a fairly strong package. It reduces the income-tax rates, which is important to us. When you lay this plan next to the Democrat plan as put forward by Baucus, the Democrat plan would actually harm the economy," said Stephen Moore, the president of the Club for Growth, a tax-cut advocacy group.

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